ACIT, New Delhi v. M/s Ambience Hotels & Resorts Ltd., New Delhi

ITA 2722/DEL/2011 | 2005-2006
Pronouncement Date: 10-02-2012 | Result: Dismissed

Appeal Details

RSA Number 272220114 RSA 2011
Assessee PAN AAECA6845N
Bench Delhi
Appeal Number ITA 2722/DEL/2011
Duration Of Justice 8 month(s) 15 day(s)
Appellant ACIT, New Delhi
Respondent M/s Ambience Hotels & Resorts Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 10-02-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 10-02-2012
Date Of Final Hearing 02-02-2012
Next Hearing Date 02-02-2012
Assessment Year 2005-2006
Appeal Filed On 26-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI K.G. BANSAL ACCOUNTANT MEMBER ITA NOS.2614 TO 2617/DEL/2011 ASSESSMENT YEARS : 2005-06 2006-07 2007-08 & 2008-09 ACIT CC-16 NEW DELHI. VS. AMBIENCE DEVELOPERS PVT. LTD. L-4 GREEN PARK EXTENSION NEW DELHI. PAN : AAECA6845N ITA NOS.2722 TO 2725/DEL/2011 ASSESSMENT YEARS : 2005-06 2006-07 2007-08 & 2008-09 ACIT CC-16 NEW DELHI. VS. AMBIENCE HOTELS & RESORTS LTD. L-4 GREEN PARK EXTENSION NEW DELHI. PAN : AADCA7906K ITA NOS.2382 TO 2387/DEL/2011 A.YS : 2003-04 2004-05 2005-06 2006-07 20 07-08 & 2008-09 ACIT CC-16 NEW DELHI. VS. AMBIENCE PROJECTS & INFRASTRUCTURE PVT. LTD. L-4 GREEN PARK EXTENSION NEW DELHI. PAN : AAACA0541K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T.R. TALWAR ADVOCATE REVENUE BY : MRS. GEETMALA MOHANANY CIT DR ORDER PER BENCH: ALL THESE APPEALS ARE FILED BY THE REVENUE. THE ISSUE RAISED IN ITA NOS.2614 TO 2617/DEL/2011 AND ITA NOS.2722 TO 272 5/DEL/2011 ARE IDENTICAL. THE ISSUE RAISED IN ITA NOS.2382 TO 2387/DE L/2011 IS CONSEQUENTIAL TO THE DECISION TAKEN IN OTHER APPEALS. ALL THESE APPEALS ITA NOS.2614 TO 2617/DEL/2011 ITA NOS.2722 TO 2725/DEL/2011 ITA NOS.2382 TO 2387/DEL/2011 2 WERE ARGUED TOGETHER BY BOTH THE PARTIES HENCE FOR THE SAKE OF CONVENIENCE ALL OF THEM ARE DECIDED BY THIS COMMON O RDER. GROUNDS OF APPEAL IN ITA NOS.2614 TO 2617/DEL/2011 AND ITA N OS.2722 TO 2725/DEL/2011 ARE IDENTICAL EXCEPT DIFFERENCE OF FI GURES. THE GROUNDS OF APPEAL IN ITA NO.2614/DEL/2011 READ AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING ADDITION OF RS.1 21 73 148/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CONSTRUCTION OF MALL. 2 (A) THE ORDER OF THE CIT (A) IS ERRONEOUS AND NOT TE NABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 1.1. IN OTHER APPEALS THE FIGURES ARE AS UNDER:- ITA NO . AMOUNT 2615/DEL/2011 RS.1 53 05 051/- 2616/DEL/2011 RS.2 78 56 077/- 2617/DEL/2011 RS.1 44 38 380/- 2722/DEL/2011 RS.1 83 56 653/- 2723/DEL/2011 RS.2 95 92 793/- 2724/DEL/2011 RS.6 21 57 745/- 2725/DEL/2011 RS.5 71 22 742/- ITA NOS.2614 TO 2617/DEL/2011 2. A SEARCH AND SEIZURE ACTION U/S 132 WAS TAKEN AT AMB IENCE GROUP OF COMPANIES ON 10 TH OCTOBER 2007 AND THE ASSESSEES IN THE PRESENT CASE ARE COMPANIES OF THIS GROUP. THE GROUP IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF COMMERCIAL AND RESIDENTIAL P ROPERTIES VIZ. MALLS TOWNSHIPS APARTMENTS BUSINESS TOWERS ETC. IN THE NATIONAL ITA NOS.2614 TO 2617/DEL/2011 ITA NOS.2722 TO 2725/DEL/2011 ITA NOS.2382 TO 2387/DEL/2011 3 CAPITAL REGION OF DELHI AND OTHER NEARBY AREAS. THE SE COMPANIES UNDERTOOK THE CONSTRUCTION OF AMBIENCE MALL AT VASANT KUNJ NEW DELHI WHICH WAS IN PROGRESS AT THE TIME OF SEARCH. IT WAS NOT ED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT MAJOR CONSTR UCTION AND DEVELOPMENT WORK OF THE PROJECT WAS CARRIED OUT BY T HE DEVELOPER COMPANY OF THE GROUP NAMELY M/S AMBIENCE PROJECTS & INFRASTRUCTURE LTD. (NOW KNOWN AS AMBIENCE LTD.). IT WAS NOTICED TH AT CERTAIN COST AND EXPENSES ARE ALSO BEING INCURRED DIRECTLY BY THE A SSESSEE COMPANIES IN THE SAID PROJECT. THE ASSESSING OFFICER ON THE BASIS OF CERTAIN SEIZED DOCUMENTS CAME TO THE CONCLUSION THAT T HE EXPENSES ON ACCOUNT OF CONSTRUCTION ARE NOT COMPLETELY RECORDED IN THE BOOKS OF ACCOUNT. THEREFORE HE MADE A REFERENCE TO THE VAL UATION OFFICER U/S 142A OF THE IT ACT. AS PER THE REPORT OF THE DVO T OTAL CONSTRUCTION OF THE SAID PROPERTY WAS ESTIMATED AT ` 294 10 83 065/- I NCURRED OVER VARIOUS YEARS AS AGAINST THE COST OF CONSTRUCTION SHOWN BY THE ASSESSEE AT ` 287 13 10 409/- AS PER RETURN OF INCOME. THE COMPARATIVE DETAILS ARE DESCRIBED IN THE FOLLOWING CH ART:- S.NO. PERIOD OF CONSTRUCTION COST OF CONSTRUCTION AS PER THE RETURN (RS.) COST OF CONSTRUCTION AS ESTIMATED BY DISTT. VALUATION OFFICER (RS.) DIFFERENCE (RS.) 1. 2004-05 365040484/- 377213632/- 1 21 73 148/- 2. 2005-06 785635822/- 800940873/- 1 53 05 051/- 3. 2006-607 923281818/- 951137895/- 2 78 56 077/- 4. 2007-08 797352285/- 811790665/- 1 44 38 380/- TOTAL: 287 13 10 409/- 294 10 83 065/- 6 97 72 656/- 2.1. THE DIFFERENCE AMOUNT WAS ADDED TO THE INCOME O F THE ASSESSEE IN THE RESPECTIVE YEARS. ITA NOS.2722 TO 2725/DEL/2011 3. THE OTHER FACTS RELATING TO THIS CASE ARE SIMILAR EX CEPT DIFFERENCE IN FIGURES. THE COST OF CONSTRUCTION MADE BY THIS ASSESSEE WAS VALUE ITA NOS.2614 TO 2617/DEL/2011 ITA NOS.2722 TO 2725/DEL/2011 ITA NOS.2382 TO 2387/DEL/2011 4 AT ` 467 30 50 071/- AGAINST THE COST OF CONSTRUCTION SHOWN BY THE ASSESSEE IN ITS RETURN AT ` 450 58 20 428/-. THE POSITIO N IS AS WORKED OUT IN THE FOLLOWING CHART:- S.NO. PERIOD OF CONSTRUCTION COST OF CONSTRUCTION AS PER THE RETURN (RS.) COST OF CONSTRUCTION AS ESTIMATED BY DISTT. VALUATION OFFICER (RS.) DIFFERENCE (RS.) 1. 2004-05 494600000/- 512956653/- 1 83 56 653/- 2. 2005-06 797345555/- 826938348/- 2 95 92 793/- 3. 2006-607 1674764870/- 1736922325/- 6 21 57 745/- 4. 2007-08 1539110003/- 1596232745/- 5 71 22 742/- TOTAL: 450 58 20 428/- 467 30 50 071/- 16 72 29 643/- 3.1 THE DIFFERENCE FOR THESE YEARS WAS ADDED TO THE IN COME OF THE ASSESSEE. 4. BEFORE CIT (A) BOTH THESE ASSESSEES CHALLENGED THE ADD ITION OF AFOREMENTIONED AMOUNTS TO ITS INCOME IN RESPECT OF EAC H OF THE YEAR FIRSTLY; ON THE GROUND THAT REFERENCE OF VALUATION U /S 142A TO THE DEPARTMENTAL VALUATION OFFICER IS NOT IN ACCORDANCE WITH LAW AS SECTION 142A DOES NOT APPLY ON SECTION 69C AND RELIAN CE WAS PLACED MAINLY ON THE DECISION OF HONBLE DELHI HIGH COURT I N THE CASE OF CIT VS. AAR PEE APARTMENTS PVT. LTD. (2009) 319 ITR 276 ( DEL). SECONDLY THE REFERENCE TO DVO WAS CHALLENGED ON THE GROUND TH AT NO DEFECT HAS BEEN POINTED OUT IN THE BOOKS OF ACCOUNT WHICH ARE R EGULARLY MAINTAINED BY THE ASSESSEE AND ARE AUDITED. WITHOUT PO INTING OUT ANY DEFECTS IN THE BOOKS OF ACCOUNT NO ADDITION WHATSOEVE R COULD BE MADE ON ACCOUNT OF DIFFERENCE IN THE COST OF CONSTRUC TION SHOWN BY THE ASSESSEE AND ESTIMATED BY DVO AND FOR RAISING SUCH CONTENT ION THE RELIANCE WAS MAINLY PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SARGAM CINEMA VS. CIT (2010) 328 ITR 5 13 (SC). THIRDLY THE ADDITION WAS CHALLENGED ON THE GROUND THAT THE D IFFERENCE IN THE COST OF CONSTRUCTION AND ESTIMATE MADE BY THE DVO WAS L ESS THAN 5% ITA NOS.2614 TO 2617/DEL/2011 ITA NOS.2722 TO 2725/DEL/2011 ITA NOS.2382 TO 2387/DEL/2011 5 (2.43% IN THE CASE OF AMBIENCE DEVELOPERS PVT. LTD. A ND 3.71% IN THE CASE OF AMBIENCE HOTELS AND RESORTS PVT. LTD.) TO ASSAIL THE ADDITION ON THIS BASIS THE ASSESSEE PLACED RELIANCE ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. V.T. RAJENDRA N (2007) 288 ITR 312. 5. CONSIDERING THESE SUBMISSIONS OF THE ASSESSEE LEARNED CIT (A) HAS ARRIVED AT A CONCLUSION THAT THE REFERENCE TO DVO WAS AGAINST THE PROVISIONS OF LAW AS U/S 142A OF THE IT ACT AS REFERENCE CANNOT BE MADE IF THE ADDITION IS TO BE MADE U/S 69C OF THE ACT AND FOR THIS PURPOSE LEARNED CIT (A) HAS RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AAR PEE APAR TMENTS PVT. LTD. (SUPRA). HE ALSO HELD THAT REFERENCE TO DVO ALSO WAS N OT VALID AS THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECT S IN THE BOOKS OF ACCOUNT REGULARLY MAINTAINED AND AUDITED. HE OBSE RVED THAT IT WAS THE PRESUMPTION OF THE ASSESSING OFFICER THAT SOME EXPENSE S MENTIONED IN THE SEIZED DOCUMENTS ON ACCOUNT OF CONSTR UCTION WERE NOT COMPLETELY RECORDED IN THE BOOKS OF ACCOUNT AND THIS PRESUMPTION WAS NOT FOUND CORRECT WHEN THE ASSESSEE HAD EXPLAINED TH E EXPENSES AND THOSE WERE VERIFIED BY THE ASSESSING OFFICER WITH TH E SUPPORTING EVIDENCE VIS-A-VIS THE BOOKS OF ACCOUNT. THE ASSESSING O FFICER ALSO DID NOT REJECT THE BOOKS OF ACCOUNT U/S 145(3) BY POINTIN G OUT ANY DEFECT. LEARNED CIT (A) ALSO HELD THAT EVEN IF THE REPORT OF THE DVO IS CONSIDERED TO BE VALIDLY OBTAINED THEN ALSO THE DI FFERENCE IN THE COST OF CONSTRUCTION SHOWN BY THE ASSESSEE AND ESTIMATED BY DVO WAS MEAGER WHICH IS FAIRLY MARGINAL AND IS IN THE ACCEPTA BLE ERROR MARGIN RANGE. THE REPORT OF THE DVO IS ONLY AN ESTIMATION A ND THE VARIATION IS BOUND TO BE THERE FOR VARIOUS REASONS/FACTORS. THUS TA KING INTO ACCOUNTS ALL THESE FACTORS HE HAS DELETED THE AMOUNT AD DED TO THE ITA NOS.2614 TO 2617/DEL/2011 ITA NOS.2722 TO 2725/DEL/2011 ITA NOS.2382 TO 2387/DEL/2011 6 INCOME OF THE ASSESSEE. THE REVENUE IS AGGRIEVED WITH SU CH DELETION IN ALL THESE CASES AND HAS FILED THE AFOREMENTIONED APP EALS. 6. AT THE OUTSET IT WAS POINTED OUT BY THE LEARNED A R THAT IN GROUP CASES OF M/S AMBIENCE DEVELOPERS AND INFRASTRUCTURE PVT. LTD. SIMILAR ADDITIONS WERE MADE IN RESPECT OF ASSESSMENT YEARS 2003-04 TO 2007- 08 AND THE CIT (A) HAD DELETED THE ADDITION. THE O RDER OF THE CIT (A) WAS CHALLENGED BY THE DEPARTMENT IN THE TRIBUNAL AND THE APPEALS OF THE DEPARTMENT HAVE BEEN DECIDED BY THE TRIBUNAL VI DE ORDER DATED 5 TH AUGUST 2011 IN ITA NOS. 2376 TO 2381/DEL/2011. HE H AS PRODUCED BEFORE US COPY OF THE SAID ORDER AND A COPY WAS ALSO GI VEN TO THE LEARNED DR. IT WAS SUBMITTED BY HIM THAT THE FACTS AN D CIRCUMSTANCES OF THE SAID CASE ARE IN PARI MATERIA WITH THE FACTS OF THESE CASES. HE SUBMITTED THAT THE DIFFERENCE IN THAT CASE WAS ONLY 3. 86% WHICH WAS A SMALL PERCENTAGE AND THUS HE SUBMITTED THAT THE ISSUES RAISED BY THE DEPARTMENT IN THE PRESENT APPEALS ARE COVERED BY THE AFOREMENTIONED DECISION OF THE TRIBUNAL. 7. ON THE OTHER HAND THE LEARNED DR RELIED UPON TH E ORDER OF ASSESSING OFFICER. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE RELEVANT OBSERVAT IONS OF THE TRIBUNAL FROM THE AFOREMENTIONED ORDER DATED 5 TH AUGUST 2011 ARE REPRODUCED BELOW:- 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND P ERUSED THE RELEVANT MATERIAL ON RECORD. THE MAIN ISSUES RAISED IN SERIATIM ARE AS UNDER:- (A) WHETHER ASSESSEES BOOKS OF ACCOUNT ARE REJECTED ? 14. IT HAS NOT BEEN DISPUTED THAT ASSESSEE MAINTAINS PRO PER BOOKS OF ACCOUNT WHICH ARE AUDITED AND SUPPORTED BY ITA NOS.2614 TO 2617/DEL/2011 ITA NOS.2722 TO 2725/DEL/2011 ITA NOS.2382 TO 2387/DEL/2011 7 VOUCHERS EXCEPT VAGUE REFERENCE TO SOME SEIZED DOCU MENTS WHICH WE SHALL DEAL LATER. THERE IS NO REFERENC E TO ANY SPECIFIC ORDER BY THE AO REJECTING THE BOOKS S ECTION 145(3) READS AS UNDER:- WHERE THE ASSESSING OFFICER IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE OR WHERE THE METHOD OF ACCOUNTING PROVIDED IN SUB-SECTION (1) OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUB- SECTION (2) HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE THE ASSESSING OFFICER MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144. 15. IN THIS CASE NEITHER THE AO HAS ASKED THE ASSESSE E ANY QUESTION ABOUT THE ASSESSEES BOOKS OF ACCOUNT OR METHOD OF ACCOUNTING BEING DEFECTIVE NOR ASKED TO ASSESS UN DER SECTION 144. FOR REJECTING THE BOOKS ASSESSEE WHO HAS APPEARED AND COOPERATED IN ASSESSMENT PROCEEDINGS IS TO BE CALLED ON TO EXPLAIN THE DISCREPANCIES INCO RRECTNESS OR INCOMPLETENESS. THE QUESTION OF REJECTION WILL BE TENABLE WHEN ASSESSEES EXPLANATION IS PROPERTY CONSIDERED FOLLOWING BY A FINDING THAT THE BOOKS ARE INCOMPLETE INC ORRECT OR METHOD OF ACCOUNTING IS NOT REGULARLY FOLLOWED. IN TH IS CASE ASSESSEE HAS GIVEN A PROPER EXPLANATION ABOUT SEIZED DOCUMENTS BEFORE AO THEN BEFORE THE CIT(A) WHICH IS FORWARDED TO AO IN REMAND PROCEEDINGS. IN TH E ABSENCE OF ANY SPECIFIC ORDER OF AO U/S 145(3) WE ARE UNABLE TO ACCEPT LEARNED DRS ARGUMENTS THAT THE BOOKS HAVE BEEN IMPL IEDLY REJECTED. THEREFORE THE CIT(A)S FINDING ON THIS ASP ECT IS UPHELD. (B) WHETHER ASSESSEE DID NOT EXPLAIN ALLEGED I NCRIMINATING SEIZED DOCUMENTS? 16. FROM THE FACTS IT EMERGES THAT DURING THE C OURSE OF SEARCH SOME ALLEGED INCRIMINATING DOCUMENTS FROM G ROUP ENTITIES WAS FOUND DURING THE COURSE OF SEARCH. ASSESSEE AGREED TO DECLARATION OF `40 CRORES IN GROUP ENTI TIES WHICH HAS BEEN IMPLEMENTED BY PAYING TAXES AND OF GROUP ENTITIES. THERE IS NO DISPUTE ON THIS ISSUE. FROM THE A SSESSEES PAPER BOOK PAGE 4 ONWARDS VIDE LETTER DATED 2 3.9.2009 ASSESSEE HAS OFFERED AN EXPLANATION ANNEXURE-WI SE ON THE SEIZED DOCUMENTS ALONGWITH COPIES OF THE SUPPORTIN G ACCOUNTS AND DOCUMENTS. IN OUR VIEW THE ASSES SEE HAS DISCHARGED ITS ONUS BY FURNISHING THE EXPLANATION. IN THE ITA NOS.2614 TO 2617/DEL/2011 ITA NOS.2722 TO 2725/DEL/2011 ITA NOS.2382 TO 2387/DEL/2011 8 ASSESSMENT ORDER AO HAS NOWHERE CONTROVERTED ANY OF THE CONTENTS OF EXPLANATION AS THERE IS NO FINDING THAT ASS ESSEES EXPLANATION IS NOT CORRECT. ASSESSEE HAVING DISCHARGE D ITS ONUS AND AO HAVING NOT REJECTED OR CONTROVERTED IT I T CANNOT BE ASSUMED THAT THE ALLEGED INCRIMINATING MATERIAL RE MAINED UNEXPLAINED. IN OUR VIEW ASSESSEE GROUP HAVING MA DE THE DECLARATION AND EXPLAINED THE SEIZED DOCUMENTS WE A RE UNABLE TO HOLD THAT THE ASSESSEE DID NOT EXPLAIN INCRIMINATING DOCUMENTS AND ON THAT BASIS BOOKS S HOULD BE INDIRECTLY REJECTED U/S 145. THEREFORE THE OBSERVATIO N OF THE AO THAT THE VALUATION PROPOSAL HAS BEEN MADE U/S 142A CANN OT BE UPHELD ON THE BASIS THAT COST OF CONSTRUCTION COU LD NOT BE ASCERTAINED THIS INFERENCE HAS NO TENABLE BASIS. THU S THERE IS NEITHER REJECTION OF BOOKS ON THE BASIS THAT THE COS T COULD NOT BE SAID TO BE UNEXPLAINED. IN OUR VIEW ASSESSEE FURNISHED PROPER EXPLANATION FOR SEIZED MATERIAL A ND NO ADVERSE INFERENCE CAN BE DRAWN ON THIS ISSUE. (C) WHETHER THE REFERENCE TO DVO UNDER SECTION 142A IS PROPER? 17. SECTION 142A EMPOWERS THE AO TO REFER TO DVO VALUA TION WHERE AN ESTIMATE OF VALUE REFERRED TO IN SECTION 69 OR SECTION 69B WHEN THE ASSESSEE IS FOUND TO HAVE INVESTED M ORE COSDT THAN REFLECTED IN THE BOOKS. BOTH THE SECTIONS READ A S UNDER:- 69. WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT IF ANY MAINTAINED BY HIM FOR ANY SOURCE OF INCOME AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. 69B. WHERE IN ANY FINANCIAL YEAR THE ASSESSEE HAS MADE INVESTMENTS OR IS FOUND TO BE THE OWNER OF ANY BULLION JEWELLERY OR OTHER VALUA BLE ARTICLE AND THE ASSESSING OFFICER FINDS THAT THE AMOUNT EXPENDED ON MAKING SUCH INVESTMENTS OR IN ACQUIRING SUCH BULLION JEWELLERY OR OTHER VALUABLE ARTICLE EXCEEDS THE AMOUNT RECORDED IN THIS BEHALF IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR ANY SOURCE OF INCOME AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT SUCH EXCESS AMOUNT OR THE EXPLANATION OFFERED BY HIM IS ITA NOS.2614 TO 2617/DEL/2011 ITA NOS.2722 TO 2725/DEL/2011 ITA NOS.2382 TO 2387/DEL/2011 9 NOT IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY THE EXCESS AMOUNT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. 18. SECTION 69 IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS IT PERTAINS TO INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS. SECTION 69B DEALS WITH A SITUATION WHERE AO FINDS THAT AMOUNT OF INVESTMEN T EXCEEDS THE AMOUNT RECORDED IN THIS BEHALF IN THE BOOKS OF ACCOUNT AND ASSESSEE DOES NOT OFFER SATISFACTORY EXPLANATION. IN SUCH CASE THE EXCESS INVESTMENT M AY BE DEEMED TO BE INCOME OF THE ASSESSEE. THIS SECTION CA N BE ATTRACTED WHEN THE AO ASKS THE ASSESSEE AN EXPLANATIO N ABOUT INADEQUATE INVESTMENT. AS ALREADY EXPLAINED IN THIS CASE NEITHER AO PUT UP A QUESTION ABOUT INADEQU ATE COST OF CONSTRUCTION IN THE BOOKS OF ACCOUNT NOR ASSESSEES EXP LANATION OFFERED IN RESPECT OF SEIZED DOCUMENTS IS ADVERTED TO BY THE AO WHICH IS PLACED ON PAPER BOOK PAGE 4 ONWARDS. T HUS SECTION 69B WAS NOT PROPERLY APPLIED BY THE AO IN THESE FACTS. THERE BEING NO DEFECT IN THE BOOKS OF ACCOUNT NOR ANY FINDING ABOUT INADEQUATE COST OF CONSTRUCTION BASED ON ANY C OGENT MATERIAL AND OVERLOOKING OF ASSESSEES EXPLANATIO N ABOUT SEIZED DOCUMENTS THERE WAS NO JUSTIFICATION FOR THE AO TO MAKE A PROPOSAL UNDER SECTION 142A IN VIEW OF HON'B LE SUPREME COURT JUDGMENT IN THE CASE OF SARGAM C INEMA (SUPRA) AND HON'BLE DELHI HIGH COURT JUDGMENT IN THE CASE OF AAR PEE APARTMENTS P.LTD. (SUPRA). IN VIEW THERE OF WE UPHOLD THE FINDING OF THE CIT(A) THAT THE REFEREN CE TO DVO UNDER SECTION 142A WAS NOT JUSTIFIED IN GIVEN FACTS AND CIRCUMSTANCES. (D) DVOS REPORT. 19. IN THE VALUATION REPORT DVO WHILE GIVING THE RATES HAS NOT PREPARED THE VALUATION ON THE BASIS OF QUANTI TIES MEASUREMENT AND ARCHITECTURAL DESIGNS. THE REFERENC E TO DVO WAS MADE ON 30.9.2009. IT HAS NOT BEEN DISPUTED THAT THE ASSESSEES MALL IS A HUGE PROPERTY INVOLVING VARIO US MEASUREMENTS BASED ON ARCHITECTURAL DESIGNS. THE DVO S TEAM VISITED THE PROPERTY ON 3RD TO 5TH NOVEMBER 2009 AND THE FINAL REPORT HAS BEEN SENT ON 23RD DECEMBER 2009. THE REPORT IS BASED ON CPWD FLAT RATES. 20. THE DVOS REPORT IN THE EYES OF LAW IS AN E STIMATE PREPARED BY AN EXPERT. NEVERTHELESS LEGALLY I T REMAINS AN OPINION BASED ON ESTIMATES AND IN THIS CASE THIS OPINION IS TOTALLY BASED ON CPWD FLAT RATES. THE ASSESSEES BOOK S OF ACCOUNT ARE WRITTEN ON DAY TO DAY BASIS OVER THE NUMBER OF ITA NOS.2614 TO 2617/DEL/2011 ITA NOS.2722 TO 2725/DEL/2011 ITA NOS.2382 TO 2387/DEL/2011 10 YEARS WHICH HAS NOT BEEN DISPUTED. ACCORDING TO THE ASSESSEE THE BOOKS CONTAINED ACTUAL EXPENSES IN CURRED IN CONSTRUCTION OF MALL. THE BOOKS OF ACCOUNT OF THE ASSE SSEE ARE NOT AS SUCH REJECTED. THE DIFFERENCE BETWEEN THE DVOS OPINION AND ASSESSEES BOOKS IS 3.86%. LEARNED DR CONTENDS THAT THE PERCENTAGE MAY NOT BE LOOKED INTO AS THE CONSEQUENTIAL AMOUNT IS VERY LARGE. IN OUR CONSI DERED VIEW THE PREPARATION OF AN OPINION BASED ON AN ESTIM ATE INVARIABLY INVOLVES A DIFFERENCE AS COMPARED TO OTHER FIGURES. IN THIS CASE THE ASSESSEES BOOKS ARE REGULARLY M AINTAINED AUDITED AND THE CONSTRUCTION SPREADS IN YEARS. TH E SEIZED DOCUMENTS HAVE BEEN OFFERED TO BE EXPLAINED. IN OUR VIEW A FLAT RATE ESTIMATION INVOLVING A DIFFERENCE OF 3.86% WITHOUT GIVING THE REBATES ABOUT GROUPS OWN SUPER VISION AND BULK PURCHASE OF MATERIALS CANNOT PROPERLY SUBSTITUTE THE COST OF CONSTRUCTION REGULARLY REFLECTED IN TH E BOOKS OF ACCOUNT OF THE ASSESSEE UNLESS COGENT AND PLAUSIBLE RE ASONS ARE ESTABLISHED. IN THIS CASE THE ALLEGED INCRIMI NATING MATERIAL HAS BEEN EXPLAINED BY THE ASSESSEE. UNDER THE FACTS A ND CIRCUMSTANCES OF THIS CASE WE ARE UNABLE TO AGREE WITH THE LEARNED DR THAT THOUGH THE DIFFERENCE OF 3.86% IS SMAL L PERCENTAGE CONCEPT MAY BE IGNORED. AN ESTIMATE ULTIMA TELY REMAINS AN ESTIMATE AND THE ELEMENT OF DIFFERENCE IS TO BE LOOKED FROM PERCENTAGE POINT OF VIEW. IN OUR VIEW A SHAKY DIFFERENCE OF 3.86% ON A DVO SUMMARY VALUATION AS MENTIONED ABOVE IS TO BE IGNORED. 21. IN VIEW OF THE FOREGOING REASONS AND CIRCUM STANCES WE SEE NO INFIRMITY IN THE ORDERS OF CIT(A) DELETIN G THE ADDITIONS IN ALL THESE YEARS. THE ORDERS OF CIT(A ) ARE THEREFORE UPHELD AND THE APPEALS FILED BY THE REVENUE ARE DISMISSED. 22. IN THE RESULT APPEALS FILED BY THE REVENUE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 5 TH AUGUST 2011. 9. IT HAS BEEN POINTED OUT BY THE LEARNED AR THAT TH E FACTS AND CIRCUMSTANCES OF THESE APPEALS ARE PARI MATERIA WITH THE FACTS OF AFOREMENTIONED CASE OF M/S AMBIENCE DEVELOPERS AND INF RASTRUCTURE PVT. LTD. AND THE LEARNED DR COULD NOT CONTROVERT T HIS FACT THEREFORE RESPECTFULLY FOLLOWING THE AFOREMENTIONED DECISION OF COORDINATE BENCH WE FOUND NO MERIT IN THESE DEPARTMENTAL APPEA LS AND THUS ARE DISMISSED . ITA NOS.2614 TO 2617/DEL/2011 ITA NOS.2722 TO 2725/DEL/2011 ITA NOS.2382 TO 2387/DEL/2011 11 ITA NOS.2382 TO 2387/DEL/2011 10. GROUNDS OF APPEAL IN ITA NOS.2382 TO 2387/DEL/201 1 ARE IDENTICAL EXCEPT DIFFERENCE OF FIGURES. THE GROUNDS OF APPEAL IN ITA NO.2382/DEL/2011 READ AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING ADDITION OF RS.48 347/- MADE BY THE A.O. ON ACCOUNT OF PROFIT ON UNDISCLOSED RECEIPT OF CO NSTRUCTIONS OF PROPERTIES. 2 (A) THE ORDER OF THE CIT (A) IS ERRONEOUS AND NOT TE NABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 10.1. IN OTHER APPEALS THE FIGURES ARE AS UNDER:- ITA NO . AMOUNT 2383/DEL/2011 RS.11 62 087/- 2384/DEL/2011 RS.28 61 212/- 2385/DEL/2011 RS.78 25 567/- 2386/DEL/2011 RS.1 48 33 224/- 2387/DEL/2011 RS.2 01 26 601/- 11. IN THESE CASES THE DIFFERENCE IN THE COST OF CONSTRU CTION AND ESTIMATED VALUE ASSESSED BY DVO WERE CONSIDERED TO BE REC EIPTS IN THE HANDS OF THIS ASSESSEE ON WHICH GP WAS CALCULATED. TH E YEAR-WISE CALCULATIONS ARE AS UNDER:- ASSESSMENT YEAR 2003-04 1. ADDITION MADE IN THE CASE OF AMBIENCE MALL AT GURGAON ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE CONSTRUCTION RS.7 33 655/- ITA NOS.2614 TO 2617/DEL/2011 ITA NOS.2722 TO 2725/DEL/2011 ITA NOS.2382 TO 2387/DEL/2011 12 ADDITION @ GP OF 6.59% RS.48 347/- ASSESSMENT YEAR 2004-05 1. ADDITION MADE IN THE CASE OF AMBIENCE MALL AT GURGAON ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE CONSTRUTION FOR THIS ASSESSMENT YEAR RS.1 09 11 624/- ADDITION @ GP OF 10.65% R.11 62 087/- ASSESSMENT YEAR 2005-06 1. ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE CONSTRUCTION FOR THIS ASSESSMENT YEAR IN THE CASES OF I) AMBIENCE MALL AT GURGAON RS.2 46 12 807/- II) FIVE STAR HOTEL & SERVICE APPTTS. PROJECT AT GURGAON RS.1 85 56 653/- III) AMBIENCE MALL AT VASANT KUNJ NEW DELHI. RS.1 21 73 148/- RS.5 53 42 608/- ADDITION @ GP OF 5.17% RS.28 61 212/- ASSESSMENT YEAR 2006-07 1. ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE CONSTRUCTION FOR THIS ASSESSMENT YEAR IN THE CASES OF I) AMBIENCE MALL AT GURGAON RS.4 14 77 078/- II) FIVE STAR HOTEL & SERVICE APPTTS. PROJECT AT GURGAON RS.2 95 92 793/- III) AMBIENCE MALL AT VASANT KUNJ NEW DELHI. RS.1 53 05 051/- RS.8 63 74 922/- ADDITION @ GP OF 9.06% RS.78 25 567/- ASSESSMENT YEAR 2007-08 1. ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE CONSTRUCTION FOR THIS ASSESSMENT YEAR IN THE CASES OF I) AMBIENCE MALL AT GURGAON RS.4 68 24 043/- II) FIVE STAR HOTEL & SERVICE APPTTS. PROJECT AT GURGAON RS.6 21 57 745/- III) AMBIENCE MALL AT VASANT KUNJ NEW DELHI. RS.2 78 56 077/- RS.13 68 37 865/- ADDITION @ GP OF 10.84% RS.1 48 33 224/- ITA NOS.2614 TO 2617/DEL/2011 ITA NOS.2722 TO 2725/DEL/2011 ITA NOS.2382 TO 2387/DEL/2011 13 ASSESSMENT YEAR 2008-09 1. ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE CONSTRUCTION FOR THIS ASSESSMENT YEAR IN THE CASES OF I) AMBIENCE MALL AT GURGAON RS.3 82 40 303/- II) FIVE STAR HOTEL & SERVICE APPTTS. PROJECT AT GURGAON RS.5 71 22 742/- III) AMBIENCE MALL AT VASANT KUNJ NEW DELHI. RS.1 44 38 380/- RS.10 98 01 425/- ADDITION @ GP OF 18.33% RS.2 01 26 601/- 11.1. THE AFOREMENTIONED AMOUNTS WERE ADDED TO THE INCOME OF THE ASSESSEE IN THE RESPECTIVE ASSESSMENT YEARS. THE ADDITIONS HAV E BEEN DELETED BY THE LEARNED CIT (A) MAINLY ON THE GROUND THAT IN THE HANDS OF PAYER COMPANIES HE HAS DELETED THE ADDITION. THE REVENUE IS AGGRIEVED HENCE IN APPEAL. 12. IT HAS ALREADY BEEN POINTED OUT THAT THE RESULT O F THESE APPEALS WILL BE CONSEQUENTIAL TO THE DECISION TAKEN IN AFOREM ENTIONED APPEALS. THE ADDITION IS ONLY OF THE GP WHICH HAS BEEN CALCULA TED ON THE ADDITIONAL AMOUNT ADDED ON ACCOUNT OF DIFFERENCE IN CONSTRUCTION COST SHOWN BY THE PAYER AND ESTIMATED BY THE DVO WHICH HA S BEEN CONSIDERED TO BE RECEIPT IN THE HANDS OF THE ASSESSEE. T HE DIFFERENCE IN THE COST OF CONSTRUCTION IN THE HANDS OF THE PAYER COMPANIES HAS BEEN DELETED THEREFORE THERE IS NO QUESTION OF ASSESSIN G ANY GROSS PROFIT ON THOSE RECEIPT IN THE HANDS OF THE ASSESSEE AS TH E VERY BASIS DOES NOT EXIST. THEREFORE WE FIND NO INFIRMITY IN T HE ORDER OF THE CIT (A) VIDE WHICH HE HAS DELETED THE ADDITION ON THE GR OUND THAT THE MAIN ADDITION IN THE HANDS OF THE PAYER COMPANIES HAS ALREA DY BEEN DELETED. FOR THE SAKE OF COMPLETENESS THE OBSERVATIONS OF THE CIT (A) WHILE DELETING THIS ADDITION ARE REPRODUCED BELOW:- ITA NOS.2614 TO 2617/DEL/2011 ITA NOS.2722 TO 2725/DEL/2011 ITA NOS.2382 TO 2387/DEL/2011 14 6. I HAVE CONSIDERED THE ASSESSING OFFICERS ORDER HIS REMAND REPORT AND THE SUBMISSIONS MADE BY THE APPELLAN T AND THE POSITION OF FACTS AND LAW. IN THIS RESPECT IT IS OBS ERVED THAT THE ADDITIONS MADE IN THE HANDS OF THE RESPECTIVE OWNER COMPANIES OF THE AFORESAID PROJECTS AS UNEXPLAINED I NVESTMENT HAVE BEEN DELETED BY ME YEAR BY YEAR IN THE RESPECTI VE APPEALS OF THOSE COMPANIES AS PER MY DETAILED ORDERS SEPARATELY PASSED BY THE ORDERS DATED 29.03.2011 IN THE IR RESPECTIVE CASES HENCE NO ADVERSE INFERENCE CAN BE DRAWN IN THE CASE OF THE APPELLANT COMPANY ON THE BASIS OF THE ASSESSMENT ORDERS PASSED IN THEIR CASES. FURTHER MORE IT IS ALSO OBSERVED THAT THE ASSESSING OFFICER IN THIS CASE ALSO H AS NOT POINTED OUT ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNTS OF THE APPELLANT COMPANY AS WELL AS THOSE OF THE OWNER COMPAN IES WHICH ARE REGULARLY MAINTAINED AND AUDITED. HENCE A NY DIFFERENCE BETWEEN THE COST OF CONSTRUCTION SHOWN BY THE RESPECTIVE COMPANIES AS PER THEIR BOOKS OF ACCOUNTS AN D AS ESTIMATED BY THE DVO WHICH IS OTHERWISE INSIGNIFICANT A ND IS WITHIN THE ACCEPTABLE RANGE OF ERROR MARGIN AS HELD BY VARIOUS JUDICIAL FORMA CANNOT BE MADE THE BASIS EITHER FOR MA KING ANY ADDITION U/S 143(3) R.W. SECTION 153A OF THE IT ACT IN THE HANDS OF THE OWNER COMPANIES AS UNEXPLAINED INVESTMENT OR FOR ESTIMATING NOTIONAL PROFIT IN THE HANDS OF THE APPELLANT CONTRACTOR COMPANY. AS HELD REPEATEDLY BY VARIOUS JUD ICIAL FORA SINCE THE APPELLANT HAS BEEN SUBJECTED TO ACTION U/S 132 OF THE IT ACT THE SCOPE OF ANY SUCH ADDITION U/S 143(3) R.W. S.153A OF THE IT ACT ON ESTIMATION BECOMES SEVERELY RESTRICTED BY THE FINDINGS AND EVIDENCES OF THE SEARCH ACTION AND ANY A TTEMPT TO BASE ADDITIONS ON THE BASIS OF SUCH ESTIMATIONS IS DIFF ICULT TO BE APPROVED. 7. IN VIEW OF THE ABOVE POSITION THE ADDITIONS MADE IN EA CH OF THE APPEALS LISTED ABOVE IN EACH OF THE ASSESSMENT YEAR S IS DIRECTED TO BE DELETED. 13. THEREFORE WE DECLINE TO INTERFERE IN THE RELIE F GRANTED BY THE LEARNED CIT (A). THESE APPEALS FILED BY THE REVENUE ARE ALSO DISMISSED. ITA NOS.2614 TO 2617/DEL/2011 ITA NOS.2722 TO 2725/DEL/2011 ITA NOS.2382 TO 2387/DEL/2011 15 14. IN THE RESULT ALL THE APPEALS FILED BY THE REVEN UE ARE DISMISSED IN THE MANNER AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH FEBRUARY 2012. SD/- SD/- [K.G. BANSAL] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 10.02.2012. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES